Buying activity in older developments at Farrer-Holland Rd area

1,108 sq ft, two-bedroom unit on the third floor of Spanish Village was sold for $1.76 million, or $1,583 psf, on Sept 16

A 2,551 sq ft, four-bedroom unit on the second floor of Holland Peak was sold for $3.65 million, or $1,431 psf

The Edge Singapore, | OCTOBER 7, 2013

BY Gwyneth Yeo

Older developments in the Holland Road and Farrer Road neighbourhoods have seen a pick-up in transactions over the week of Sept 13 to 20, according to the caveats lodged with URA’s Realis.

For instance, the 17-year-old freehold development Sommerville Grandeur on Farrer Road saw a 1,830 sq ft, three-bedroom unit sold for $3.23 million ($1,776 psf). The seller had bought the second floor unit in December 2007 for $2.47 million ($1,350 psf). The same unit was also transacted in 1999 for $1.43 million ($781psf). Over the years, there have been very few transactions in the 96-unit condominium. The deal on Sept 20 is the first this year, and also happens to be the most expensive unit sold to date in terms of both quantum and price psf.

Sommerville Grandeur

Raymond Ho, senior division director at ERA Real ty Network, who is marketing a 1,195 sq ft,two-bedroom unit at Sommerville Grandeur, believes the latest transacted price is reasonable, given the unit’s size. He says he’s had several viewings for the apartment he is currently marketing,which has an asking price of $1.95 million ($1,632 psf).

He adds that the apartment is the only one currently on the market. Given the lack of stock and the stiff competition, two other agents are also marketing the same unit.

The larger sizes and better layout of units at older freehold developments such as Sommerville Grandeur relative to newer condos in the neighbourhood make them sought-after. This is also the case at the neighbouring Spanish Village, a 226-unit freehold condo developed in 1987, and the 456-unit Sommerville Park, a freehold development that sits on a sprawling site and was completed in 1978. Units in these projects can achieve higher selling prices than those in newer condos in the area, given their scarcity, notes Ho.

At Spanish Village, a 1,109 sq ft, two-bedroom unit on the third floor sold for $1.76 million ($1,583 psf) on Sept 16. The unit last changed hands in 1997 for $995,000 ($897 psf). So far this year, only five units at the project have changed hands. The last transaction was in June, when a 2,056 sq ft, three-bedroom apartment on the fifth floor was sold for $2.64 million ($1,283 psf).

Nizam Gafoor, senior associate district director of Propnex Realty, who is marketing a 786 sq ft, one-bedroom unit in Spanish Village, says there has been increased interest from both investors and owner occupiers looking for affordably priced units in completed projects. This is because they want something they can move into right after they sell their HDB flats or private homes, he explains. “It’s a reflection of the difficulty in securing financing, especially when servicing an existing mortgage, owing to the TDSR [total debt servicing ratio] that kicked in three months ago.”

The asking price of the 786 sq ft unit at Spanish Village that Gafoor is marketing is $1.35 million, or $1,718 psf. This is considered affordable for a freehold property and is comparable to prices achieved for similar-sized units at the 99-year leasehold 1,715-unit D’Leedon, which have ranged from $1,654 psf for a mid-floor unit to $1,983 psf for a high-floor unit.

Some long-term investors are also looking to buy such freehold projects in anticipation of a future en-bloc sale, says Gafoor. “In this current market, an en bloc is unlikely, but buyers could see capital gains in the next property upturn.”

Homebuyers are starting to recognise the value of buying resale units in prime districts, as they see greater potential of capital appreciation, says Lynette Choy, a senior associate director at OrangeTee. For example, at the 132-unit freehold Holland Peak, developed by Japanese construction company Shimizu in 1994, a 2,551 sq ft, four-bedroom unit recently changed hands for $3.65 million ($1,431 psf).

“The older freehold properties in the Holland Road-Holland Hill area appear undervalued compared with 99-year leasehold condos in city-fringe locations such as Ang Mo Kio, Alexandra and Bishan, where units at recent launches have been sold at higher prices,” says Choy. “Perhaps that’s why some investors are starting to take a second look at the area.”